The ETF Market Kind Of Broke Yesterday

Yesterday's big selloff exposed a weakness in one of Wall Street's darling products, Exchange Traded Funds (ETFs), the FT reports, and no one really saw it coming.

ETFs are a baskets of goods that can be traded like a single asset. They've become really popular on the Street over the last decade to the point where you can buy an ETF of almost anything — gold, kinds of companies, groups of countries (like emerging markets)... the list goes on.  And just like everything else, they got killed yesterday.

The problem wasn't just that ETFs got swept up in the general panic of the moment. It was that as traders sold off and ETFs got cheaper, the discount between the price of the ETF and the assets that made it up widened.  Suddenly, everyone wanted to redeem those underlying assets from banks like Citi and State Street.

Now you can imagine what happened next……..

Read all about it at http://www.businessinsider.com/etfs-hurt-in-bond-selloff-2013-6

There's A Sect Of Successful Traders Who Couldn't Care Less What Bernanke Says, Or About News

According to BI: Naturally, when markets go up or down, people look for cause and effect.  We went up because of X, or we went down because of Y.  The market “liked” this or it did not “like” that. But in many cases (and I would argue, in most cases), PRICE is the cause.  More transactions occur because the price changed than because the news changed.  We can rationalize and reason and assess all we want.  When we actually push buy or sell, we care most about PRICE.  Because whatever our reasoning, at the end of the day, month, or year, the only reason we are successful is because of PRICE.  Not because of the reasoning.  Not because of the news.  Not because of Ben Bernanke, or Mario Draghi, or Shinzo Abe.  Because of PRICE.

That’s why there are successful traders who don’t even pay attention to the news.  They don’t care about the why of PRICE.  They only care about PRICE.  And they react accordingly….

http://www.businessinsider.com/only-price-matters-in-trading-2013-6

Libor Case Dragnet More: J.P. Morgan, Deutsche and Others Tried to Fix Rates

From the WSJ: Tom Hayes, a former UBS and Citigroup trader, has been charged with eight counts of fraud as part of the U.K. investigation into the alleged manipulation of the London interbank offered rate. WSJ’s David Enrich looks at the charges as the whole probe into the rate scandal spreads globally.

The U.K.'s Serious Fraud Office this week charged former UBS AG and Citigroup Inc. trader Tom Hayes with eight counts of "conspiring to defraud" in an alleged attempt to manipulate the London interbank offered rate, or Libor. Mr. Hayes appeared in a London court Thursday, where prosecutors for the first time detailed their allegations against him, including a list of institutions whose employees Mr. Hayes allegedly conspired with.

http://online.wsj.com/article/SB10001424127887323893504578556941091595054.html?KEYWORDS=libor

Dr. Doom and Gloom Sees Further Downside

China's factory output weakened to a 9-month low today, and financials saw a huge sell-off today, with the FM traders; and The Gloom, Boom and Doom Report's Marc Faber, shares his economic outlook.

There's plenty of room for the stock market to decline, noted bear Marc Faber said Thursday on CNBC.

"Yes, I see further downside," said the editor of "The Gloom Boom & Doom Report."

However, Faber said that there were plenty of reasons for stocks to head lower other than what the Federal Reserve was doing in terms of quantitative easing.  Faber noted that interest rates have been rising for a year, pointing to the 30-year U.S. Treasury bond and the 10-year U.S. Treasury note bottoming out in July.

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But that wasn't the whole bear case.  "The Chinese economy is much weaker than the official statistics suggest," Faber said. "My view would be that at the present time, the Chinese economy is growing at something like 4 percent per annum, and without huge credit expansion there would probably be no growth at all….”

Grab a fresh hankie and read more at http://www.cnbc.com/id/100833048

Weirdest Market Indicator Yet: Using Hershey Chocolate to Predict the Market

From CNBC:  Life may be like a box of chocolates, but how about the stock market? Brian Stutland of the Stutland Volatility Group believes that chocolate sales can tell us a great deal about where the market will go next.

"Your basic thing that everybody loves is chocolate," Stutland said. "If chocolate sales are falling—if you hate chocolate—you definitely hate real estate or whatever big-ticket purchases you want to make."

So to get a jump on the market's next move, Stutland zeros in on one particular company: Hershey.  In addition to capturing chocolate sales, "Hershey usually trades at a pretty low multiple," said Stutland, who is an "Options Action" contributor. "If the multiple starts to get overextended, and investors start to take the multiple down, that is probably going to happen across the marketplace. So the market will follow the mean trend" that is first set by Hershey…..

 Read all about it at http://www.cnbc.com/id/100828643

Several of John Paulson’s stocks are getting creamed

According to BI gold prices are in meltdown mode today and gold stocks are also getting crushed.  The precious metal fell below $1,300 an ounce, the lowest level in two years.

Let's do a quick scoreboard check of closely-followed billionaire hedge fund manager John Paulson, who has been long a bunch of gold stocks.   Here's a rundown of his gold stock holdings based on the most recent securities filing for the first quarter ended March 31.  Keep in mind, it is possible that he could have pared back some of his stakes in these stocks.  

Allied Nevada Gold (1,502,184 shares in Q1): The stock was last trading down at $6.52 per share or down about 8.68%.  The stock hit a 52-week low of $6.51 today.

Anglogold Ashanti (31,290,050 shares in Q1):  The stock was last trading down at about $14.59 per share or down about 3.81%. The stock hit a 52-week low of $14.35 today.

Barrick Gold (360,000 shares in Q1):  The stock was last trading down at about $17.00 per share or down about 5.63%. It hit a 52-week low of $16.45 today.

There’s more….read all about it at http://www.businessinsider.com/john-paulson-gold-stocks-performance-2013-6

Hedge fund Grandmaster sees stock market crash in China

Holy Hannah!  Former chess grandmaster-turned hedge fund manager Patrick Wolff is betting on a stock market crash in China, where he told Reuters corruption and bad debts have spiraled to dangerous levels.

Speaking to Reuters on the sidelines of the GAIM conference in Monaco this week, Wolff said investors were too focused on trying to work out when easy money policies will taper off in the United States and ignoring a looming correction in China.

"People are talking way too much about the Federal Reserve and not enough about China," he said. "We've been saying that the U.S. is the safest place to invest, while China is a crash waiting to happen."

"China's centrally-planned economy inevitably means massive corruption and a massive misallocation of capital," he added, pointing to increasing funding problems for Chinese companies.

Read all about it at http://www.reuters.com/article/2013/06/20/uk-hedgefunds-gaim-grandmaster-idUSLNE95J00H20130620